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Kim Dotcom - Source: ONE News
Mathias Ortmann, Fin Batato and Bram Van der Kolk, and Kim Dotcom at the North Shore District Court. - Source: ONE News -
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The mastermind of the alleged piracy operation that spanned the globe is fighting back.
Megaupload founder Kim Schmitz, also known as Kim Dotcom, is hiring former US president Bill Clinton's lawyer to battle allegations that it illegally peddled copyrighted materials on its website Megaupload.com.
Dotcom and three associates were denied bail in court yesterday afternoon.
All associates face extradition to the US for their alleged role in Megaupload which US Federal prosecutors say has cost copyright holders more than $620 million in revenue lost through pirated material.
Dotcom and his co-accused Finn Batato, 38, Mathias Ortmann, 40, both from Germany, and Dutch national Bram van der Kolk, 29, will reappear for a bail hearing at the North Shore District Court on Monday.
Dotcom will be celebrating his 38th birthday in prison today, where he will remain until his next appearance in court on Monday for a bail hearing.
The extravagant birthday party which was planned at Dotcom's residence over the weekend has been curtailed with his arrest.
Police say when they got wind of Dotcom's birthday celebration plans they knew it was the right time to make their move as all of Dotcom's associates had flown in for the party.
Police also seized several of the self-confessed speed demons cars, which did not make him popular with his neighbours.
"Just about ran me off the road in a big black Mercedes Benz, probably doing a good 120-odd kilometres an hour," said neighbour "Rob".
Police have completed their search of 186 Mahoenui Road in Coatesville today, and more larger items will be removed in the coming days.
Detective Inspector Grant Wormald of the Organised & Financial Crime Agency New Zealand says the team will continue working at the North Shore policing centre through the weekend.
"Our focus now is on completing all the documentation required by Crown Law ahead of the next court appearance on Monday.
"The team of four FBI staff will also remain working with us for the next few days."
Now, an Immigration New Zealand spokesperson is questioning Dotcom's residency.
Dotcom was granted residence in 2010 under the investor plus scheme, despite previous convictions for computer hacking and fraud.
"It requires him to invest $10 million to New Zealand. That's fine but let's make sure we get people of good character into New Zealand and not just allow people to buy their way into New Zealand," said Darien Fenton, Labour Immigration spokesperson.
In a statement, Immigration NZ said the immigration act allows for discretion.
"In this particular case Immigration NZ weighed the character issue and any associated risk to New Zealand against potential benefits to New Zealand," it said.
But when Dotcom tried to buy a Coatesville mansion a short time later, he was turned down because he did not meet the good character test.
"I would have thought at that point there would have been some flags raised... because If he doesn't meet the good character test to buy a property he doesn't meet the good character test to have residency in New Zealand," said Fenton.
It is also understood Dotcom was bringing in his own nannies and cooks, and questions are also being raised over their status, and whether Dotcom was complying with New Zealand labour laws.
All to be tried in US
The accused face a maximum penalty of 20 years in prison on
racketeering charges, five years for conspiracy to commit copyright
infringement, 20 years on money laundering and five years on
related charges.
Wormald said the organisation and police had been working with the FBI for several months.
Police say there is no intention to try the group under New Zealand law.
"All the accused have been indicted in the United States. We will continue to work with the US authorities to assist with the extradition proceedings."
Megaupload's lawyer Ira Rothken said the company is looking at its legal options for getting back its servers and its domain and getting its servers back up online.
"Megaupload will vigorously defend itself."
He said the company simply offered online storage.
"It is really offensive to say that just because people can upload bad things, therefore Megaupload is automatically responsible."
No decision has been made yet about whether they will fight extradition from New Zealand to the United States, Rothken said.
The Justice Department said two defendants are still at large.
Possible new Megaupload site
Megaupload is trying to recover its servers and get back online, a lawyer for the company said.
Less than a day after US authorities shut down the Megaupload site and several of its sister sites, there appeared to be an attempt to resurrect the site.
Twitter was flooded with messages circulating a new Internet Protocol address, but the site offered no substantive content immediately and it did not appear that it was sanctioned by Megaupload.
The new website, which is being hosted in the Netherlands, looked similar to the original Megaupload.com website. The company's lawyer said that he was not directly familiar with the new site.
"We're not familiar with any official effort at this point to get the site back up in light of the fact that its major servers are in the possession of the United States government and other governments," Rothken said.
According to a media report on the website NPR.org, though it does not have a domain name, it appears Megaupload is trying to get back online.
The page has the message that: "This is the NEW MEGAUPLOAD SITE! we are working to be back full again."
US officials were asked about the risk of the site reappearing elsewhere in the future, a key issue that has confronted authorities in the past when they've tried to shut down Internet sites selling counterfeit goods.
"Right now we're in the process of executing search and seizure warrants and certainly it's not going to pop up again today. But I couldn't speculate as to what may or may not happen in the future," one Justice Department official said on Friday (NZT).
Another official said "maintaining and running and assembling a site like this is very expensive. And obviously the seizure of financial assets is critical in this type of investigation and prosecution in preventing it from going forward."
The case, which started as an investigation in March 2010, emerged just as lawmakers in Congress have been battling over new legislation sought by the television, movie and music industries that was aimed at making it harder for such material to be so easily peddled over the Internet.
Some major technology companies, including Google and Facebook, have sought to derail the current versions of the legislation because they were concerned they would lead to censorship and lengthy litigation.
On Friday, Democratic Senate Majority Leader Harry Reid postponed a vote on one bill that was set for Tuesday until several issues are resolved.
Stop-gap measure only
Meanwhile, New Zealand is being urged to think carefully about the US copyright laws that have forced the closure of Megaupload and seen extradition proceedings launched against its founders.
Some experts say shutting down sites like Megaupload are a stop-gap measure only that do little to fix the problem of illegal copyrighting.
Internet New Zealand's chief executive Vikram Kumar said shutting Megaupload down does not solve the real problem, which is the failure of key players to keep pace with technology.
"This is all about controlling the content and the creativity and maximising the money, Hollywood and the music industry aren't willing to move on," Kumar said.
This is contributing to enormous global demand for online file sharing, even though many Aucklanders appear unfamiliar with Megaupload.
But visitors familiar with Megaupload said they will get what they want elsewhere on line.
"It'll affect the less internet savvy people who don't understand other ways to get what they want but it won't affect me by any means," one visitor told ONE News.
The targeting of Megaupload's founders in Auckland follows similar anti-piracy operations in recent months in Greece, Germany and India but internet users say it is only a matter of time until a similar online entity crops up elsewhere.
"They were very large. It's very unlikely that they're re-emerge at the same size and in the same form," said Kumar.
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